Justice Department Reverses Stand on Gambling Statute

Justice Department Reverses Stand on Gambling Statute

Legal Sidebari

Justice Department Reverses Stand on
Gambling Statute
March 6, 2019
In January, Deputy Attorney General Rod J. Rosenstein announced that the Justice Department’s Office of
Legal Counsel (OLC) had determined that a federal gambling statute, the so-called Wire Act, applied to
both sports gambling and non-sports gambling. The OLC opinion reversed an earlier pronouncement
issued in 2011. The 2011 OLC Memorandum itself had contradicted a long-held understanding within the
Justice Department. The Deputy Attorney General instructed the federal prosecutors and Federal Bureau
of Investigation to delay acting on the change of interpretation for 90 days to “give businesses that relied
on the 2011 OLC [Memorandum] time to bring their operations into compliance with federal law.” Media
accounts report that the recent interpretation may impact emerging interstate internet gambling ventures
including internet poker and state lotteries.
The Issue
The Wire Act, parsed, enumerated, and with emphasis added for purposes of discussion, states in pertinent
part:
Whoever being engaged in the business of betting or wagering knowingly uses a wire
communication facility
[1] for the transmission in interstate or foreign commerce of [a] bets or wagers or [b] information
assisting in the placing of bets or wagers on any sporting event or contest, or
[2] for the transmission of a wire communication [a] which entitles the recipient to receive money
or credit as a result of bets or wagers, or [b] for information assisting in the placing of bets or
wagers,
shall be fined under this title or imprisoned not more than two years, or both.
The issue from the beginning has been whether the term “on any sporting event or contest” refers to the
bets or wages in [1][a], [1][b], [2][a], and [2][b] or only to the bets or wages in [1][b] or possibly only on
bets or wages in [1][a] and [1][b]. The 2011 OLC Memorandum determined the term applied to all four
prohibitions. The recent OLC Opinion concludes that the term only applies to [1][b], information assisting
the placing of bets or wagers, and that the other prohibitions apply to sports and non-sports gambling
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alike. Both the 2011 OLC Memorandum and the recent OLC Opinion claim support from the sparse and
divided case law under the Act.
Background
Congress passed the Wire Act in 1961as part of an anti-racketeering package of statutory prohibitions, and
has left it essentially unchanged ever since. Prior to 2011, the Department of Justice (DOJ) relied upon it
primarily to prosecute sports-related gambling, with only rare recourse to it for other forms of gambling.
DOJ consistently informed Congress, however, that DOJ viewed the Wire Act as applicable to all forms
of gambling.
The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) brought the issue to the fore. State
officials in Illinois and New York asked DOJ whether UIGEA trumped the Wire Act’s ban on (1) a state
lottery’s use of out-of-state processing services or (2) in-state online lottery transactions that crossed state
lines during transmission. DOJ responded in the 2011 OLC Memorandum that there was no Wire Act ban
on such state lottery activity. The Wire Act, it said, bans only sports-related gambling activities. Because
the state lotteries did not involve sports gambling, the Wire Act did not apply to them, the 2011 OLC
Memorandum concluded. All of which made unnecessary any speculation on the impact of the UIGEA on
the scope of the Wire Act, the memorandum added.
2011 OLC Memorandum
The 2011 OLC Memorandum pointed to portions of the Wire Act’s legislative history for support of the
proposition that sports gambling was the main focus of Congress’s concern when it passed the Wire Act.
The memorandum also argued that a logical reading of the statute suggests that Congress referred to “bets
or wagers on any sporting event” once and elsewhere used the term “bets or wagers” as shorthand for the
term “bets or wagers on any sporting event.” The memorandum claimed support from a separate
provision in the Wire Act. Section 1084(b) of the Wire Act permits the transmission of sports gambling
information to and from states in which sports gambling is lawful. Had Congress intended the Wire Act to
reach non-sports gambling, it would not have limited the exception to sports gambling information, the
memorandum reasoned.
Recent OLC Opinion
Asked to reconsider the matter, the OLC Opinion concluded “that the words of the statute are sufficiently
clear that all but one of its prohibitions sweep beyond sports gambling” and “that the 2006 enactment of
UIGEA did not alter the scope of the Wire Act.” The OLC Opinion captures the difference between its
analysis and that of the 2011 OLC Memorandum with a quote from the Supreme Court: “[O]nce
[Congress] enacts a statute, ‘we do not inquire what the legislature meant; we ask only what the statute
means.’” There is no need for recourse to the Wire Act’s legislative history when its language is clear, the
OLC Opinion declared. And it called upon two canons of statutory construction to buttress its
interpretation of the Wire Act’s language.
One, the “‘last-antecedent rule’ reflects the basic intuition that when a modifier appears at the end of a
list, it is easier to apply that modifier only the item directly before it.” Thus, from the perspective of the
OLC Opinion, when the Wire Act bans “transmission … of bets or wagers or information assisting in the
placing of bets or wagers on any sporting event or contest,” the rule limits the application of the
modifying phrase “on any sporting event or contest” to the last antecedent, i.e., the phrase “information
assisting in the placing of bets or wagers.” The second canon, the “series-qualifier” rule, arises when a
modifier appears at the beginning or end of a list of related verbs or nouns, in which case the modifier is
thought to apply to each of the verbs or nouns in the list. The rule, however, “applies when a modifier

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precedes or follows a list, not [as in the Wire Act] when the modifier appears in the middle” of the list, the
OLC Opinion contends.
As for the question of UIGEA’s possible limitation on the scope of the Wire Act, the OLC Opinion
determined that “UIGEA … in no way ‘alter[s], limit[s], or extend[s]’ the existing prohibitions under the
Wire Act.”
The OLC Opinion ends with an affirmation of its general reluctance to repudiate prior OLC
pronouncements and an explanation of why it felt compelled to overturn the 2011 OLC Memorandum.
The OLC is slow to walk away from its precedents for the same reasons that courts, under the stare
decisis doctrine, are reluctant to abandon their precedents: “efficiency, institutional credibility, and the
reasonable expectations of those who have relied on” the precedent. As in the case of stare decisis, OLC
is willing to revisit a precedent when the laws or facts have changed or when the precedent is clearly in
error and is no longer tenable. The OLC Opinion rests on this last point, but finds further assurance in the
fact that: (1) the 2011 OLC Memorandum is relatively recent and overturned the DOJ long-standing view
that the OLC Opinion reinstates; and (2) a dispositive judicial construction of the Wire Act is more likely
because prosecution is more likely in light of the OLC Opinion.
Impact and Congressional Options
Media coverage of the OLC Opinion suggests that under the OLC’s reading of the Wire Act interstate
internet non-sports gambling ventures are unlawful. DOJ delayed the effective date of the OLC Opinion
for 90 days for those involved in the gaming industry to bring their activities into compliance with the
Wire Act, as newly construed. Lottery officials in at least one state have reportedly sued to enjoin
enforcement.
The OLC Opinion has no impact on DOJ’s view of the Wire Act’s coverage of sports gambling. The 2011
OLC Memorandum already applied the Wire Act to all sports-related gambling.
The OLC Opinion likely has no impact on the in-state transmission and receipt of information (although
not necessarily of bets or wagers) even if the communication passes through another state during the
course of transmission. Existing Supreme Court case law suggests that the First Amendment’s Free
Speech Clause precludes a ban in such cases. The Court in Greater New Orleans Broadcasting Ass’n, Inc.
v. U.S. held that the federal ban of broadcasting gambling information could “not be applied to
advertisements of private casino gambling that are broadcast by radio or television stations located in
Louisiana, where such gambling is legal,” even though the broadcasts could also be heard in Texas and
Arkansas where casino gambling was illegal.
Congress has several options. The Wire Act is the work of Congress, and Congress is free to rework it.
Congress may elect to endorse the interpretation of either the 2011 OLC Memorandum or the more recent
OLC Opinion. Senator Lindsey Graham, now Chairman of the Senate Judiciary Committee, proposed
clarifying amendments in this vein in the wake of the 2011 OLC Memorandum. Senator Graham’s
proposal (S. 1668 (114th Cong.)), and that of then Representative Jason Chaffetz in the House (H.R. 707
(114th Cong.)), would have largely codified the interpretation of the recent OLC Opinion. Alternatively,
Congress may prefer to re-examine federal law relating to sports gambling or to gambling generally.
Then Senator Orrin Hatch urged this approach in the 115th Congress. There, he offered the proposed
Sports Wagering Market Integrity Act (S. 3793 (115th Cong.)) which would have include modifications in
the Wire Act as part of more comprehensive adjustment of federal sports gambling law. On the other
hand, Congress may find it prudent to await a judicial resolution of OLC’s conflicting interpretations and
other gambling-related developments.

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Author Information

Charles Doyle

Senior Specialist in American Public Law

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